Studies On The Determination Of Serious Prejudice In SCM Agreement

Since2004, countries have launched more than50countervailing investigations against China. In order to solve this problem, China have also launched four countervailing investigations to the United States and other countries. In this condition, a better understanding of the international subsidy countervailing rules for maintaining our interests becomes an important subject.According to the Agreement on Subsidies and countervailing Measures, Adverse effects the subsidy made on other members is a necessary condition for taking countervailing measures to the actionable subsidy. The adverse effects have three situations:injury to the domestic industry of another Member; nullification or impairment of benefits accruing directly or indirectly to other Members under GATT1994in particular the benefits of concessions bound under Article Ⅱ of GATT1994; serious prejudice to the interests of another Member. Although the Article6of the SCM Agreement makes comprehensive provisions about the determination of serious prejudice, these provisions use many fuzzy concept, so the determination of serious prejudice is complex in practice. The WTO decisions made some analysis on such issues, Europe and the United States also accumulated some practical experiences.This article is divided into three chapters, The first chapter summaries up the meaning and several features of the serious violations, based on the analysis of the WTO’s ruling and its development process from the perspective of the historical background. Serious prejudice is the adverse effects which a member makes on the similar products of another in the price, market position, sales and other market conditions.The second chapter elaborate analyzes how the DSB determinate the serious prejudice in the perspective of substantive rules, by summarizing the report of WTO cases. Firstly, the author summarize the path of the determination of the serious prejudice. Secondly, four types of serious prejudice in the Article6, paragraph3are analyzed one by one, highlighting the analysis of some key words,such as "similar products",“market”and“causation”.The third chapter of the article studies the information-gathering procedure of the serious prejudice. The SCM Agreement imposes an obligation to cooperate with the panel’s fact-gathering activities on members. This procedure is completed by the designated representative, who has independent decision of the matters related to the information-gathering. The provisions of the SCM Agreement about the protection of trade secret and the problem of reverse inference are ambiguously, But there have been some worthwhile learning experience in practice.